London, Dec. 15. The former desk head at UBS’s London wealth management business, accused of defrauding customers of millions of pounds through rogue trades, was the “golden boy” whose methods were a model for the rest of the bank, a tribunal heard.

Sachin Karpe, the former head of the Asia II desk who was dismissed after five years of unauthorised trades were exposed by a whistleblower, was held in awe and trusted by senior management to such an extent he was able to re-engineer the bank’s controls, according to Hodge Malek, QC, for Karpe’s co-defendant.

The former foreign exchange dealer at ABN Amro, who had worked in the financial services industry since 1990, was regarded as a rising star at UBS and given the title managing director. But, in reality, Karpe deployed a mix of charm and aggression to dupe colleagues and clients, which allegedly cost customers £27 million and UBS an £8-million fine from the UK Financial Services Authority, Malek told the tribunal.

Reading from a trail of e-mails, the barrister said after a lunch between Karpe and a senior manager in January 2007, he was praised for his impressive financial performance and told that his leadership style should be implemented on UBS’s other wealth management desks.

“He was a role model for others,” Malek said. “The guy was so highly regarded they were asking him to advise on how to adopt the model across the desks.”

Karpe and Laila Karan, his client adviser, are both facing life bans from working in the UK financial services industry and fines from the FSA as part of the regulator’s investigation into thousands of unauthorised trades on 39 client accounts between 2002 and 2007. The two are alleged to have speculated in foreign currencies and commodities.

According to Malek, even after his scam was revealed clients in whose accounts he had carried out unauthorised trades continued to trust him and invited him to the weddings of their sons and daughters.

The tribunal was told how Karpe, whose clients included Indian diamond merchants whose identities are protected, is alleged to have cultivated close relationships with them to win their trust. He would then refuse to disclose their account statements to them or doctor them.

He was allegedly able to carry off the scam by bullying his subordinates to sign off bogus transactions on the accounts or by “hijacking” the clients that his underlings had brought in.

He also set up a system where the bank believed that clients in India had received account statements, but they had been sent to an offshore company in the British Virgin Islands and were then returned to London where they were destroyed, Malek said.

A report by KPMG into UBS’s controls, ordered by the FSA in 2008 in the wake of the scandal, was said to have concluded that Karpe had exercised “excessive authority”.

Karpe, who is not due to appear at the tribunal, is not appealing against the FSA’s lifetime ban but a £1.25 million fine.

He claims that UBS encouraged his practices, which were widespread and not properly controlled.

Karan is due to appear before the tribunal tomorrow to defend her “integrity” against allegations she supported Karpe in unauthorised trades.

UBS said it backed the action taken against the two by the FSA and that it had remedied its compliance failings.